EU's mad ban on Russian aluminium

It would appear just when the EU commission could not inflict any more wounds and pain on their beliguered industrial sectors allong comes another illthought out and hair brained scheme that will wreak havoc on Europes manufacturing sector and will have no effect of Russia whatsoeve.r

Its been annaounced  that the European Union is poised to impose a ban on aluminium imports from Russia. These restrictions will form part of the 16th package of anti-Russian sanctions. In response, the price of "winged metal" has already surged.Lets assess the implications of this ban for Europe and the global market.

According to Reuters, the European Commission (EC) will propose a draft sanctions package to EU countries, which will include a ban on imports of Russian aluminium. The restrictions will be introduced in stages, with the first ones due to come into effect in February as part of a 16th-package of anti-Russian sanctions. In the context of the ongoing discussion about sanctions on Russian metal, the price of aluminium on the London Metal Exchange (LME) has surged to $2,600 per tonne.

In December, the agency reported that at least 10 EU countries – Poland, Denmark, the Czech Republic, Ireland, Estonia, Latvia, Lithuania, Sweden, Finland and Romania – had voiced support for expanding sanctions against Russia, including trade in metals
such as aluminium.
The West has been considering a complete ban on aluminium from Russia for some time, despite Europe experiencing the consequences of its shortage in 2022 due to a significant increase in electricity prices, which led to a 20–30% decrease in production of the highly energy-intensive "aviation metal".The European Union's proposed ban on imports of Russian aluminium, if implemented, could potentially disrupt the market, as the Kremlin has cautioned. Even analysts have pointed out that such a decision would be extremely short-sighted, especially given Europe's own major lack of production issues.

"The problem is that the European Union's non-ferrous metallurgy is unlikely to be able to compensate for it with its own products due to high electricity tariffs, which even large European players such as Norsk Hydro and Trimet Aluminium are facing," notes Leonid Khazanov, an independent industrial expert.
In the context of Europe's decarbonisation efforts, the demand for aluminium is set to rise. Aluminium is a crucial component in renewable energy sources, electric vehicles, and solar panels, making it essential for the development of "green" projects, experts emphasise.so banning Russian imports is nothing sort of crazy

Since 2020, the aluminium production in Europe has been impacted firstly by the pandemic and subsequently by high electricity prices (which account for more than 40% of the cost of aluminium).In 2023 alone, European enterprises reduced aluminium and zinc production by 50%, analysts at Solid Broker note.

The share of aluminium from Russia was approximately 30% of the total volume of EU imports, and it will be challenging to almost impossible replace it quickly, which is why Europe did not dare to take such categorical measures in previous sanctions packages.Currently, Russia accounts for about 8% of European aluminium imports.Overall, the volume of aluminium imports from Russia by the European Union last year is estimated at 350 thousand tons. However around another 15% is imported from Turkey and Kazakhstan which is actually Russian with a different badge on it.
The impact of these potential losses on European consumers and businesses cannot be overlooked.
The ban on Russian imports could potentially result in a shortage of metal in Europe, which would negatively impact European processors and consumers.
A similar situation was observed in 2018, when anti-Russian sanctions led to a 35% increase in aluminum prices (almost $2,700 per ton) on the London Metal Exchange, according to Alexey Ravinsky, CEO of Zapusk Group.
This situation will have a particularly severe impact on European industry, which is still recovering from the energy crisis. There are already discussions in Europe about the onset of deindustrialisation.Energy prices in the EU are on average almost twice as high as in the US and China, which is a serious structural disadvantage in terms of competitiveness and productivity, as analysts at the French research centre Rexecode point out.
According to Eurostat data, industrial output in the eurozone fell by 2.2% and by 1.7% in the EU from July 2023 to July 2024. Hungary, Germany, Italy and France reported the worst results, with declines of 6.4%, 5.5%, 3.3% and 2.3%, respectively.

Ineos has highlighted the impact of high energy and operating costs, noting that European manufacturers are at a disadvantage compared to Asian exporters who have access to Russian hydrocarbons at reduced prices. The situation has been further complicated by the tightening of monetary policy by the European Central Bank (ECB).According to S&P Global, the trend of plant closures and mothballing is expected to continue into 2025.
As Dmitry Semenov, Chairman of the Board of Directors of Transinvest LLC, predicts, possible new sanctions against Russian suppliers will lead to a deficit of aluminium in European countries by 25–30% and by 15–20% on the world market.

If Russian supplies are banned, European countries will have to look for new sources of aluminium, for example, in the Middle East (UAE, Bahrain). However, this could intensify competition with other countries, such as the United States, potentially leading to additional price increases.Analysts had previously warned last year that a ban on Russian supplies would create a deficit and ignite an "aluminum war" between Europe and the US for supplies from the Middle East. They predicted that metal prices would surge, causing significant challenges for the European industry.
The automotive industry, construction and energy, which are heavily reliant on aluminium and will face increased costs, are likely to be most affected by the consequences of the ban.To mitigate the impact of the supply shortfall, the EU will need to explore alternative supply sources, such as those in Canada, India, China or the Middle East. However, the capacity of key suppliers is limited, as Arthur Meinhard, head of the global markets analysis department at Fontvielle, points out.
For instance, China is a primary aluminium producer, but the country has a policy in place that limits production to 45 million tons until 2027. However, China has either already reached this limit or will reach it in the near future. This suggests that the growth of production within the country may slow down, which could lead to a decrease in the amount of metal exported, maintaining its import and prices, as the analyst explains.

In such a scenario, Russia is expected to maintain its efforts to increase aluminium exports to Asia. Over the past two years, the Russian Federation has already significantly reoriented its aluminium supplies from the European Union to China, against the backdrop of protective duties and the refusal to purchase metal from the Russian Federation by a number of key European processors.
Yet again the idiots in the EU inflict wounds on what is left of their industries in the mistaken belief that it will hurt Russia.